The terms of the settlement depend on the outcome of a Court of Appeals rehearing. If the court vacates an injunction on two patents, Vonage will pay Verizon $80 million. If the court sides again with Verizon, Vonage will pay $117.5 million.
Vonage lost two patent lawsuits brought by Verizon and
concerning Internet calling technology. In March, a federal jury in Arlington, Va., decided that Vonage should pay Verizon $58 million for damages and 5.5% in future royalties for its unauthorized use of some voice over Internet protocol technologies.
Then earlier this month, the Holmdel, N.J., voice-over-the-Net telco settled with Sprint by entering a licensing agreement with Sprint. The deal calls for Vonage to pay Sprint $35 million for use of the calling technology to date and $40 million for future use. Another $5 million was tacked on as a prepayment charge.
Vonage had set aside $146 million to settle the patent defeats at Sprint and Verizon. At June 30, the company had about $197 million in cash and, according to the company's most recent quarterly filing, about $253 million in total debt. Vonage has managed to burn through nearly $300 million of the $491 million in cash it raised with its IPO.
Vonage shares were halted in late trading Thursday after falling 7 cents in regular action to $1.53.